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China Grants Farming Cooperatives Legal Status
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China's top legislature on Tuesday ratified the law on farmers' cooperatives to better protect farmers' business interests.

The law, which was ratified at the 24th Session of the 10th Standing Committee of the National People's Congress on Tuesday, will take effect on July 1 next year.

It requires cooperatives to set up an account for every member and define their individual financial rights as a basis for sharing profits and liabilities.

It also allows for the prosecution of cooperative directors who misappropriate or embezzle funds.

The law stipulates that cooperatives are organizations for mutual assistance set up by farmers who produce similar products or offer and use similar farming services based on a household contract system.

"Rural cooperatives can effectively accelerate the entry of agricultural products into the market, which can help rural households better combat natural and market risks," said Zhang Yongjun, a representative of the National People's Congress.

The draft law, presented to legislators for the first deliberation in June, recognized that household businesses, a major backbone of China's rural economy, have become more vulnerable in the more competitive market.

According to the Ministry of Agriculture, China has more than 150,000 rural economic cooperatives, whose 23 million members account for 9.8 percent of the total rural households.

Without basic legal regulation, many cooperatives lack sound in-house operating mechanisms, putting members' economic rights and interests at risk.

(Xinhua News Agency November 1, 2006)

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